Some forex traders like fast moves. Others like slow and steady. That’s where low volatility currency pairs come in. These pairs don’t jump around much. They move slowly. This makes them safer for traders who don’t want big risks. Low volatility pairs are good for learning. They are also good for traders who want less stress. This guide will help you understand what these pairs are. It will also show you when and how to trade them.
What Are Low Volatility Currency Pairs?
Low volatility currency pairs move less during the day. They don’t have big price swings. This means fewer surprises.
Most low volatility currency pairs involve strong, stable countries. These countries have good economies. Their central banks don’t change interest rates often. Their news doesn’t cause big market moves.
Some common low volatility pairs are:
- EUR/CHF (Euro/Swiss Franc)
- EUR/GBP (Euro/British Pound)
- USD/CHF (US Dollar/Swiss Franc)
- EUR/USD (Euro/US Dollar)
These currency pairs are often liquid. This means many people trade them. But they still move slowly.
Why Do Some Currency Pairs Have Low Volatility?
Here are a few reasons:
1. Central Bank Stability
When a country’s central bank avoids sudden changes to interest rates or policies, its currency tends to stay steady. Traders feel more confident when they know what to expect. This keeps the currency from jumping up or down too quickly.
Example: The Swiss National Bank (SNB) is known for its careful approach. It doesn’t change interest rates often or surprise the market. As a result, the Swiss franc (CHF) usually moves slowly and stays predictable. That’s why pairs like EUR/CHF and USD/CHF are often low-volatility
2. Strong Economies
Countries with strong, stable economies tend to have steady currencies. Their governments and businesses run smoothly, and there are fewer surprises. This makes their currencies more trusted—and less likely to move up or down quickly.
Example: The United States, Switzerland, and much of the Eurozone have strong economies. Their currencies—like the USD, CHF, and EUR—usually don’t move sharply unless there’s unexpected news. This leads to currency pairs like EUR/USD or USD/CHF showing lower daily price swings compared to others.
3. No Major News
Some countries don’t face large political events, sudden leadership changes, or big policy shifts very often. When there’s less news or fewer market-moving events, the currency tends to stay more stable.
Example: Take Singapore for example. The country has a stable government and rarely appears in global headlines for economic or political disruption. Because of this, the Singapore dollar (SGD) often has low volatility. The USD/SGD pair is known for moving slowly unless there’s big economic news from the U.S
4. High Liquidity
When many people trade a currency pair, it becomes highly liquid. This means there are lots of buyers and sellers at any given moment. Because of this, even large trades don’t move the price much. It takes a lot of money and volume to cause big changes.
Example: The EUR/USD is the most traded pair in the world. It has very high liquidity. That means price movements are smooth and usually not extreme. This helps keep volatility low during most trading sessions, unless a major news release occurs.
How Do Low Volatility Pairs Affect Trading?
Trading these pairs is different. You won’t see fast gains. But you won’t see big losses either.
- Better for Long-Term Traders: These pairs are good for holding trades longer. The price doesn’t jump, so it’s easier to wait.
- Not Great for Scalpers Scalping means fast trades. You need fast moves to make money. Low volatility pairs don’t work well for this.
- Less Stressful: The price won’t move too far too fast. You can plan better. You don’t have to watch the charts all day.
- Small Profits per Trade: You won’t make $100 in five minutes. But you also won’t lose it. Profits come slowly but safely.
When Should You Trade Low Volatility Pairs?
These pairs are best at certain times.
- During Overlapping Sessions: Trade when the two countries’ markets are open. For EUR/GBP, trade during the London session.
- When the Market Is Calm: If the news is quiet, low volatility currency pairs are safer to trade.
- If You Want Less Risk: Some traders don’t like big ups and downs. These pairs are good for them.
Are Low Volatility Currency Pairs Profitable?
Yes, they can be. But you need a plan.
- Use larger position sizes (with good risk control).
- Hold trades longer.
- Set smaller profit targets.
- Avoid overtrading.
Profit is slower. But risk is also lower. Many smart traders prefer it this way.
Low vs High Volatility Currency Pairs
Here’s a simple comparison:
| Feature | Low Volatility Currency Pairs | High Volatility Currency Pairs |
| Price Movement | Small and steady | Large and quick |
| Risk Level | Lower | Higher |
| Best For | Beginners, investors | Scalpers, day traders |
| Stress Level | Low | High |
| Profit Potential | Small but safe | Big but risky |
Common Mistakes with Low Volatility Pairs
1. Expecting Fast Results
Some traders want fast profits. But low volatility pairs usually move slowly—sometimes only 20–40 pips in an entire day. If you expect big moves in a short time, you’ll end up frustrated or make bad trades just to “feel busy.”
Example: A trader opens a position on EUR/CHF expecting it to move 100 pips in a few hours. But the pair only moves 15 pips all day. The trader gets impatient, closes the trade too early, or even reverses the position. This leads to small, unnecessary losses. If they had waited, the original trade would’ve reached the target in two days.
Tip: Stick with realistic goals. Use swing or range trading and let your trades breathe. Low volatility rewards patience.
2. Ignoring the Spread
If a pair moves slowly, even a small cost like the spread can make a big difference. For example, if a pair moves only 30 pips per day and the spread is 3 pips, that’s 10% of the daily move lost instantly. This makes finding a good entry and exit even more important.
Example: A trader opens a short-term trade on USD/SGD with a 4-pip spread. The price only moves 20 pips total. That 4-pip cost takes away a big chunk of the possible profit. If they had used a broker with a tighter spread, like 1 pip, they could have kept more of their gain.
Tip: Always check the spread before entering a trade. Brokers like Defcofx offer low spreads starting from 0.3 pips—this can really help with low-volatility pairs.
3. Overleveraging
Since low volatility pairs move slowly, some traders use large lot sizes to try to earn more. But this is risky. A small move in the wrong direction can cause a big loss if you’re overleveraged.
Example: A trader thinks EUR/GBP won’t move much, so they open a large position using 1:500 leverage. The pair unexpectedly drops 40 pips due to sudden Brexit news. The trader loses a large portion of their account in one trade. If they had used a smaller position, the loss would’ve been manageable.
Tip: Always use smart position sizing. Don’t risk more than 1–2% of your account on a single trade, even if the pair is “safe.”
Tips for Trading Low Volatility Currency Pairs
- Use tight stop losses.
- Trade during active sessions.
- Use technical tools like RSI and Bollinger Bands.
- Avoid trading during news events.
- Be patient with your trades.
How to Measure Volatility in Forex Pairs
To trade low-volatility currency pairs well, you need to know how to measure volatility. This helps you choose the right pairs to trade.
1. Average True Range (ATR):
ATR is a tool that shows how much a pair moves. A low ATR number means low volatility. You can add the ATR to your chart to check how much a pair moves each day.
2. Bollinger Bands:
These bands show if a pair is moving a lot or not. When the bands are close together, it means low volatility. When they are far apart, it means the pair is moving a lot.
3. Historical Data:
You can look at past price charts. If a pair has small changes over time, it is likely a low volatility currency pair.
Best Trading Strategies for Low Volatility Currency Pairs
Low volatility currency pairs need different strategies than fast-moving ones. Here are a few that work well:
1. Range Trading:
These pairs often stay between support and resistance levels. You can buy near the bottom and sell near the top of the range.
Example: Let’s say EUR/CHF has been trading between 0.9700 and 0.9800 for the past three weeks. The pair touches 0.9700, bounces back up, then falls again after hitting 0.9800. A trader sees this range and decides to buy at 0.9710 with a stop-loss at 0.9680 and a take-profit at 0.9790. As long as the pair stays in the range, this setup can work again and again.
Tip: Use RSI or Bollinger Bands to help confirm when the price is near the top or bottom of the range.
2. Breakout Trading:
Sometimes, low volatility pairs break out of their range. Wait for a strong breakout with volume. Enter only after confirmation.
Example: USD/SGD has been stuck in a tight range between 1.3400 and 1.3450 for over a month. One day, strong U.S. economic news pushes the price above 1.3450 with higher trading volume. The candle closes at 1.3470. A trader waits for a retest of the 1.3450 level and enters a buy trade when the pair holds above it. The trade targets 1.3550 with a stop-loss at 1.3420.
Tip: Be patient and avoid guessing. Wait for a clear close outside the range before entering the trade.
3. Swing Trading:
You can hold trades for several days or even weeks. Since price moves slowly, this strategy fits low volatility pairs well.
Keep your trades simple. Use clear entry and exit points.
Example: AUD/NZD has been slowly rising over the past two weeks, gaining about 10 to 15 pips per day. A swing trader sees a trend forming with higher lows and higher highs. They enter a long position at 1.0800 after a small pullback, aiming to hold for 1–2 weeks. The take-profit is set at 1.0950 and the stop-loss at 1.0740.
Tip: Use the 4-hour or daily chart to find good entry points. Swing trading needs more patience, but it suits slow-moving pairs perfectly.
Case Study: Trading EUR/CHF During a Calm Market
A trader was watching the EUR/CHF pair. It had been moving in a tight range between 0.9650 and 0.9700. The trader saw that there was no big news coming. The ATR was low, showing low volatility.
Plan:
- The trader bought near 0.9650.
- They set a target at 0.9700.
- A stop loss was placed at 0.9625 to manage risk.
Result:
- After four days, the pair moved slowly up to 0.9700.
- The trader made a small, safe profit.
Conclusion
Low volatility currency pairs are perfect for traders who want slow, steady moves. They help lower your risk. They give you time to think. You can trade them without watching the market all day.
If you want a good broker to trade low volatility pairs, Defcofx is a smart choice. We offer fast withdrawals, high leverage up to 1:2000, and no commissions. Defcofx has low spreads and 24/7 support, making it easy for traders to stay calm and in control.
FAQs
- What is a low volatility currency pair?
It is a currency pair that moves slowly with smaller price changes.
- Are low volatility currency pairs good for beginners?
Yes. They are safer and easier to manage for new traders.
- Can I make money with low volatility currency pairs?
Yes. But profits come slower. You need patience and a good plan.
- What are some examples of low-volatility currency pairs?
EUR/CHF, EUR/GBP, and USD/CHF are a few common ones.
- Does Defcofx offer low volatility currency pairs?
Yes. Defcofx lets you trade all major currency pairs with low spreads and fast execution.
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